World Economy Test Preparation
Course Introduction
This course offers a comprehensive overview of the global economic system, focusing on the structure, functions, and recent developments shaping the world economy. Students will explore the historical evolution of international trade and finance, the roles of major international organizations, and the impact of globalization on economic growth, inequality, and development. The course also examines key challenges such as financial crises, trade conflicts, and the economic dimension of climate change, equipping students with analytical tools to understand the complex interactions among nations in the global marketplace.
Recommended Textbook
International Economics 16th Edition by Robert Carbaugh
Available Study Resources on Quizplus
17 Chapters
2660 Verified Questions
2660 Flashcards
Source URL: https://quizplus.com/study-set/740
Page 2
Chapter 1: The International Economy and Globalization
Available Study Resources on Quizplus for this Chatper
71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/14413
Sample Questions
Q1) The largest amount of trade with the United States in recent years has been conducted by:
A) Canada
B) Germany
C) Chile
D) United Kingdom
Answer: A
Q2) "When the United States sneezes,other nations catch a cold." This statement most closely refers to
A) economic interdependence
B) the basis for trade
C) theory of comparative advantage
D) theory of absolute advantage
Answer: A
Q3) Producing goods for export produces:
A) jobs
B) income
C) tariffs
D) a and b
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Foundations of Modern Trade Theory: Comparative Advantage
Available Study Resources on Quizplus for this Chatper
215 Verified Questions
215 Flashcards
Source URL: https://quizplus.com/quiz/14414
Sample Questions
Q1) The terms of trade is given by the prices:
A) Paid for all goods imported by the home country
B) Received for all goods exported by the home country
C) Received for exports and paid for imports
D) Of primary products as opposed to manufactured products
Answer: C
Q2) Refer to Table 2.2.According to the principle of comparative advantage:
A) South Korea should export steel
B) South Korea should export steel and VCRs
C) Japan should export steel
D) Japan should export steel and VCRs
Answer: A
Q3) Ricardo's theory of comparative advantage does not take into account demand conditions when determining relative commodity prices.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Sources of Comparative Advantage
Available Study Resources on Quizplus for this Chatper
143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/14415
Sample Questions
Q1) When industry output increases,a firm would realize an external economy of scale exists when
A) its average total cost curve shifts downward
B) its average total cost curve shifts upward
C) it slides downward along its existing average total cost curve
D) it slides upward along its existing average total cost curve
Answer: A
Q2) Dynamic comparative advantage refers to the creation of comparative advantage through the mobilization of skilled labor,technology,and capital.
A)True
B)False
Answer: True
Q3) Does factor price equalization occur in the real world?
Answer: In the real world,differences in factor prices tend to exist.Different technologies,imperfect markets,transportation costs,and trade barriers may prevent factor prices from equalizing among nations.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Tariffs
Available Study Resources on Quizplus for this Chatper
162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/14416
Sample Questions
Q1) A worker is likely to benefit from a tariff in the short run if the worker is employed in the industry that is protected by the tariff.
A)True
B)False
Q2) Although an import tariff provides the domestic government additional tax revenue,it benefits domestic consumers at the expense of domestic producers.
A)True
B)False
Q3) A tariff can increase the welfare of a "large" levying country if the favorable terms-of-trade effect more than offsets the unfavorable protective effect and consumption effect.
A)True
B)False
Q4) The deadweight losses of an import tariff consist of the protection effect plus the consumption effect.
A)True
B)False
Q5) How can tariffs be justified?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Nontariff Trade Barriers
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/14417
Sample Questions
Q1) During periods of growing demand,a tariff more effectively restricts the volume of imports than an equivalent import quota.
A)True
B)False
Q2) Consider Figure 5.1.With free trade,Mexico's consumer surplus and producer surplus respectively equal:
A) $2000 and $1200
B) $3200 and $200
C) $3600 and $800
D) $4000 and $600
Q3) Government imposed limits on the quantities of goods traded between nations are called
A) quotas
B) domestic content requirements
C) customs duties
D) tariffs
Q4) What is the price-based definition of dumping?
Q5) The result of antidumping duties is to impose a floor on foreign prices.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Trade Regulations and Industrial Policies
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/14418
Sample Questions
Q1) According to U.S.trade law,the escape clause provides relief to U.S.firms due to unfair foreign competition.
A)True
B)False
Q2) Major beneficiaries of export-credit subsidies,granted by the Export-Import Bank,have included U.S.producers of aircraft,telecommunications,and power-generating equipment.
A)True
B)False
Q3) In 1995,the General Agreement on Tariffs and Trade replaced the World Trade Organization as the body for governing the conduct of trade relations among member countries.
A)True
B)False
Q4) Critics of the World Trade Organization maintain that liberalized trade can result in A) environmental degradation
B) lower wages paid to workers
C) business firms avoiding labor protections such as workplace safety
D) all of the above
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Trade Policies for the Developing Nations
Available Study Resources on Quizplus for this Chatper
305 Verified Questions
305 Flashcards
Source URL: https://quizplus.com/quiz/14419
Sample Questions
Q1) Consider to Figure 8.1.Assume Greece levies a per-unit tariff of $20 on imports from both Germany and France.??Greece will import:
A) 1 calculator from Germany
B) 1 calculator from France
C) 3 calculators from Germany
D) 3 calculators from France
Q2) Regarding stages of economic integration,a free trade area
A) goes beyond a customs union by including a common external tariff
B) falls short of a customs union by excluding a common external tariff
C) goes beyond a common market by including a common transportation policy
D) goes beyond a common market by including a common agricultural policy
Q3) Relative to a regional trade agreement,a multilateral trade agreement may be more beneficial to global welfare in that it entails
A) less trade creation
B) less trade diversion
C) more trade diversion
D) more trade consumption
Q4) Explain the theory of optimum currency areas.
Q5) What are some major trade problems faced by developing nations?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Regional Trading Arrangements
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/14420
Sample Questions
Q1) The common agriculture policy of the European Union has supported European farmers via:
A) Export tariffs and domestic content regulations
B) Variable levies and voluntary export agreements
C) Content regulations and export subsidies
D) Export subsidies and variable levies
Q2) According to the theory of optimal currency areas,there are gains to be achieved from sharing a currency across national boundaries.These gains include
A) more uniform prices and lower transactions costs
B) greater certainty for investors and enhanced competition
C) a single monetary policy run by an independent central bank
D) all of the above
Q3) The North American Free Trade Agreement was expected to benefit ____ the most.
A) Canada
B) Mexico
C) Greenland
D) United States
Q4) What is meant by economic integration?
Q5) Who were the losers in the U.S.as a result of NAFTA?
Q6) Explain the theory of optimum currency areas.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: International Factor Movements and
Multinational Enterprises
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/14421
Sample Questions
Q1) In natural-resource oriented industries,such as oil and copper,joint ventures have often been formed by several companies since the cost of resource-extraction may be prohibitively large for a particular company.
A)True
B)False
Q2) In the United States,labor unions have generally resisted efforts to implement restrictions on the number of foreigners allowed into the country.
A)True
B)False
Q3) What are guest workers?
Q4) Suppose that a steel manufacturer headquartered in Japan sets up a subsidiary in Canada to produce steel.This practice is referred to as:
A) Conglomerate integration
B) Forward vertical integration
C) Backward vertical integration
D) Horizontal integration
Q5) What are the disadvantages of forming joint ventures?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: The Balance-of-payments
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/14422
Sample Questions
Q1) As the main reserve currency of the world,the Euro serves as a medium of exchange,unit of account,and store of value.
A)True
B)False
Q2) About two-thirds of the world's official foreign exchange reserves are held in
A) Swiss francs
B) British pounds
C) Japanese yen
D) U.S.dollars
Q3) If U.S.investors purchase Treasury Bills of the British government,this results in a
A) debit transaction in the U.S.current account
B) credit transaction in the U.S.current account
C) debit transaction in the U.S.capital and financial account
D) credit transaction in the U.S.capital and financial account
Q4) If a country consistently realizes a current-account surplus in its balance of payments,it likely will become a "net debtor" in its balance of international indebtedness.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Foreign Exchange
Available Study Resources on Quizplus for this Chatper
206 Verified Questions
206 Flashcards
Source URL: https://quizplus.com/quiz/14423
Sample Questions
Q1) If the Swiss demand for dollars is inelastic,an appreciation of the dollar against the franc will lead to a greater quantity of francs being supplied to the foreign exchange market to obtain dollars.
A)True
B)False
Q2) How is the equilibrium rate of exchange determined?
Q3) Suppose the exchange value of the British pound is $2 per pound while the exchange value of the Swiss franc is 50 cents per pound.The cross exchange rate between the pound and the franc is:
A) 1 franc per pound
B) 2 francs per pound
C) 3 francs per pound
D) 4 francs per pound
Q4) If a household purchases small amounts of foreign currency from an automated teller machine (ATM),typically imposes an additional service charge for the transaction. A)True
B)False
Q5) What foreign exchange transactions do banks typically engage in?
Q6) Where are foreign currency options traded?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Exchange Rate Determination
Available Study Resources on Quizplus for this Chatper
199 Verified Questions
199 Flashcards
Source URL: https://quizplus.com/quiz/14424
Sample Questions
Q1) According to the purchasing-power-parity theory,the U.S.dollar maintains its purchasing-power parity if it depreciates by an amount equal to the excess of:
A) U.S.interest rates over foreign interest rates
B) Foreign interest rates over U.S.interest rates
C) U.S.inflation over foreign inflation
D) Foreign inflation over U.S.inflation
Q2) Under a system of floating exchange rates,relatively low productivity and high inflation rates in the United States result in:
A) An increase in the demand for foreign currency,a decrease in the supply of foreign currency,and a depreciation in the dollar
B) An increase in the demand for foreign currency,an increase in the supply of foreign currency,and an appreciation in the dollar
C) A decrease in the demand for foreign currency,a decrease in the supply of foreign currency,and a depreciation in the dollar
D) A decrease in the demand for foreign currency,an increase in the supply of foreign currency,and an appreciation in the dollar
Q3) What is exchange rate overshooting?
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Mechanisms of International Adjustment
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/14425
Sample Questions
Q1) Refer to Figure 13.1.The U.S.capital and financial account schedule would shift upward from CA0 to CA1 if:
A) U.S.political stability improves relative to foreign political stability
B) U.S.interest rates rise relative to foreign interest rates
C) Taxes are placed on income earned by U.S.residents from foreign investments
D) Restrictions are imposed on international loans granted by foreign banks
Q2) Under the classical gold standard,a trade surplus nation would realize gold inflows,an increase in its money supply,rising interest rates,and net investment inflows. A)True
B)False
Q3) That the balance of payments could be adjusted by prices and interest rates,under a fixed exchange rate system,originated with Keynesian theory during the 1930s. A)True B)False
Q4) Referring to Figure 13.4,Canada's foreign-trade multiplier equals 2.0. A)True B)False
Q5) What is the foreign repercussion effect?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Exchange Rate Adjustments and the Balance-of-payments
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/14426
Sample Questions
Q1) Refer to Table 14.1.Assume that Toyota Inc.obtains all of its automobile inputs from Japanese suppliers.If the yen's exchange value appreciates from 200 yen = $1 to 100 yen = $1,the dollar-equivalent cost of a Toyota automobile equals:
A) $10,000
B) $20,000
C) $30,000
D) $40,000
Q2) In Figure 14.1,D represents the US demand curve for Toyotas and MC0 represents the marginal cost of producing Toyotas.A shift in the marginal cost curve from MC0 to MC1 represents
A) an appreciation of the dollar relative to the yen
B) an appreciation of the yen relative to the dollar
C) a depreciation of the dollar relative to the yen
D) neither an appreciation nor a depreciation of the dollar relative to the yen
Q3) How do movements in exchange rates affect domestic costs,in the presence of foreign sourcing?
Q4) What is a pass-through relationship?
Q5) How is the absorption approach used for analyzing the effects of currency devaluation?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Exchange Rate Systems and Currency Crises
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/14427
Sample Questions
Q1) In 1973 the major industrial countries terminated managed-floating exchange rates and adopted an adjustable-pegged exchange rates.
A)True
B)False
Q2) The exchange rate system established by the Bretton Woods Agreement of 1944-1973 was an adjustable pegged system.
A)True
B)False
Q3) A "dirty float" occurs when a nation used central bank intervention in the foreign exchange market to promote a depreciation of its currency's exchange value,thus gaining a competitive advantage compared to its trading partners.
A)True
B)False
Q4) An argument can be made for controls on the outflow of capital for developing countries because capital outflows forces a country to revalue its currency.
A)True
B)False
Q5) How can currency boards and dollarization prevent currency crises?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Macroeconomic Policy in an Open-economy
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/14428
Sample Questions
Q1) Currency devaluation and revaluation are considered to be expenditure-changing policies since they alter a country's aggregate demand for goods and services.
A)True
B)False
Q2) All of the following are obstacles to international economic policy coordination except:
A) Different national objectives and institutions
B) Different national political climates
C) Different phases in the business cycle
D) Different national currencies
Q3) Suppose Brazil faces domestic recession and a current account surplus.Should Brazil revalue its currency,one would expect the:
A) Recession to become less severe--surplus to become less severe
B) Recession to become more severe--surplus to become more severe
C) Recession to become more severe--surplus to become less severe
D) Recession to become less severe--surplus to become more severe
Q4) Was the Plaza Agreement of 1985 a success?
Q5) What is international economic policy coordination?
Q6) What policy instrument should be used when demand-pull inflation exists?
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: International Banking: Reserves, Debt, and Risk
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/14429
Sample Questions
Q1) Refer to Figure 17.1.Under a floating exchange rate system,the exchange rate would rise to $4 and U.S.monetary authorities would have to supply 4 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.
A)True
B)False
Q2) How can a bank reduce its exposure to the debt of developing nations?
Q3) Bilateral agreements between central banks,which provide for an exchange of currencies to help finance temporary balance-of-payments disequilibriums,are referred to as:
A) IMF drawings
B) Special drawing rights
C) Buffer stock facility
D) Swap agreements
Q4) Which of the following does not represent a form of international liquidity?
A) IMF reserve positions
B) General arrangements to borrow
C) U.S.government securities
D) Reciprocal currency arrangements
Q5) Describe the eurocurrency market.
To view all questions and flashcards with answers, click on the resource link above. Page 19